भारतीय रज़व बक

_____________________RESERVE BANK OF INDIA___________________

www.rbi.org.in
RBI/2014-15/261
UBD.CO.LS (PCB) Cir.No.20/07.01.000/2014-15 October 13, 2014

Chief Executive Officers of all

Primary (Urban) Co-operative Banks

Madam / Dear Sir

Review of norms for classification of Urban Co-operative Banks (UCBs) as

Financially Sound and Well Managed (FSWM)

Please refer to our circular UBD.CO.LS.(PCB).Cir.No.24/07.01.000/2013-14 dated

October 1, 2013 wherein the eligibility criteria for FSWM UCBs were laid down.

2. In this connection, attention of UCBs is invited to our circular ref:

UBD.CO.BPD.PCB.Cir.No.14/09.18.300/2013-14 dated September 11, 2013 in terms of
which UCBs were advised to implement CBS in all their branches on or before December
31, 2013 failing which no further facilities by way of branch expansion etc. may be
granted. In view of the critical importance of CBS in the banking system, it has now been
decided to include CBS implementation as an additional criterion for a UCB to be
classified as an FSWM bank. Accordingly, UCBs fulfilling the following criteria would
henceforth be termed as FSWM:
(a) CRAR of not less than 10 per cent;

(b) Gross NPA of less than 7 % and Net NPAs of not more than 3%

(c) Net profit for at least three out of the preceding four years subject to it not
having incurred a net loss in the immediate preceding year.

(d) No default in the maintenance of CRR / SLR during the preceding financial
year;

(e) Sound internal control system with at least two professional directors on the
Board;

(f) Core Banking Solution (CBS) fully implemented;

and,

शहर बक वभाग,कि य कायालय, गारमट हाऊस, पहली मं ज़ल, डॉ ए बी रोड, वरली, मुंबई- 400018 भारत
फोन: 022 - 2493 9930 - 49; फै स: 022 - 2497 4030 / 2492 0231; ई मेल: cgmincubd@rbi.org.in
Urban Banks Department, Central Office, Garment House, 1 Floor, Dr.A.B.Road, Worli, Mumbai - 400018, India
Phone: 022 - 2493 9930 - 49; Fax: 022 - 2497 4030 / 2492 0231; Email: cgmincubd@rbi.org.in
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 (g) Regulatory Comfort

3. With a view to imparting transparency and removing any unintended element of

subjectivity in the interpretation of the criterion of regulatory comfort, it is hereby
clarified that such UCBs should have a proven record of compliance with the
provisions of Banking Regulation Act, 1949 (AACS), Reserve Bank of India Act, 1934
and the instructions / directions issued by RBI from time to time i.e. the bank should
have an impeccable record of regulatory compliance and no warning letter /
cautionary advice should have been issued to or monetary penalty imposed on the
bank on account of violation of RBI directives / guidelines during the preceding three
financial years.

4. The new criteria would henceforth be considered for processing applications received
from UCBs for opening of on-site / off-site / mobile ATMs, applications under Annual
Business Plans (ABP), extension of area of operation, shifting of premises and all other
permissions from RBI.

Yours faithfully,

(A. K. Bera)
Principal Chief General Manager

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